Methods of Market Research (Edexcel IGCSE Business)

• Primary research is the process of gathering information directly from consumers in the target market using field research methods such as surveys, interviews etc
  • This research gathers information which is new and does not already exist in any format
  • The most commonly used methods of primary market research include the use of surveys, interviews based on questionnaires, observation, focus groups and test marketing 
    
    
• Businesses usually carry out primary research with a sample of the target market in which they are interested
  • A sample is a group of respondents that reflects the characteristics of the target market as a whole 
  • The larger the sample size, the more likely it is that research results will reflect the views of the target market as a whole
    
    

• A business will often use more than one method of primary research in order to build up a reliable understanding of the market
  
  • The data can then be analysed and used to make data-led judgements such as how much to charge for a new product and where to sell it

 

An Explanation of the Methods of Primary Research

Method	Explanation
Surveys	The most widely used method of gathering primary research A questionnaire is used to ask a series of questions to a certain number of people (respondents) The results from the ‘sample’ are used to to make inferences, in which the results of the sample are extrapolated to be true for the wider population A wide range of respondents can be reached using online survey tools such as Survey Monkey
Observation	This involves hiring someone to stand in an appropriate location and study consumer behaviour in a store or to perhaps judge the potential consumer traffic at a particular location Researchers may observe the impact of packaging on consumer choice, or the impact that the particular placement of a product in a store may have on consumer choice
Interviews	Questions may be set up in a very similar way to a survey, however an interviewer asks the questions This method takes longer but does allow the interviewee to ask follow up questions and gather information which can easily be missed when conducting surveys
Test marketing	Free samples are provided for a limited period of time to the target market in order to gauge their response to the product
Focus groups	Free range discussions led by a marketing specialist with the aim of collecting detailed feedback on all aspects of the marketing mix from the target market Usually limited to a small group of 12-15 people who are rewarded for their time The group typically meets for 90 minutes to 3 hours

 

Evaluating Primary Market Research

• Primary market research should be able to answer many of the specific questions businesses have about their customers, competitors and market conditions
• However, it can be costly to conduct
  • Small businesses are likely to be limited on the type and scale of primary research they conduct
    
    

The Advantages & Disadvantages of Primary Market Research

Advantages	Disadvantages
Information gathering is focused on the needs of the business and will not be available to its rivals	The sample size may be too small and unrepresentative of target customers leading to unreliable results
Some primary research methods allow in-depth information to be gathered from respondents such as reasons for certain behaviour or choices	Bias may mean that researchers can guide respondents to answer questions in a particular way Similarly respondents may be influenced by the responses of others or provide inaccurate information
Primary market research is up-to-date and can be used to ask specific questions and so will be more relevant to business decisions	A business may need to hire a specialist market research agency to help making the process expensive and time-consuming

   

• Secondary research involves the collection, compilation, and analysis of data that already exists

Diagram: Secondary Research Sources

Businesses can consult a wide range of secondary sources to gather market research data

• Government Publications: National governments and trading blocs such as the EU publish reports and statistics on topics such as the economy, demographics, industry trends and consumer behaviour
   
• Academic Institutions: Universities and research institutions conduct studies and publish research papers which provide valuable insights and data on specific industries, consumer behaviour and market trends
  • E.g. Stanford University is a globally significant research centre for engineering and medicine
     
• Industry Associations: Trade associations and industry-specific organisations provide detailed information about specific sectors, including market size, growth rates and industry benchmarks
  • E.g. The International Organisation of Motor Vehicle Manufacturers conducts and collates research on production and sales statistics
     
• Specialist Market Research Reports: Companies specialising in market research produce and sell in-depth reports on various industries, markets and consumer trends
  
  • E.g. Mintel is one of the leading private companies supplying market research information
     
• Financial Reports: Public limited companies are required to publish annual reports which can provide valuable information about a company's performance, market position and future plans
  
  
• Online Databases: There are various online databases and research platforms that provide access to a wide range of secondary market research 
  • E.g. Statista and Euromonitor International make a large volume of data on international commerce available
    
    
• Media Sources: Newspapers, magazines and online publications often contain articles, opinion pieces and investigative reports that can offer insights into market trends, consumer behaviour and industry developments
  
  • E.g. The Financial Times and the Wall Street Journal
    
    

Evaluating Secondary Market Research

• Businesses must weigh up the reliability of secondary market research
• Aspects such as cost, relevance and availability of data will affect the decision on which secondary data to use
  
  

Advantages & Disadvantages of Secondary Market Research

Advantages	Disadvantages
Information is already available and may be quicker to collect than primary research, thereby saving time   Information is often free (e.g. government websites and internet sources such as Statista) and cheaper to collect, leading to lower costs compared to primary research   Suitable for a small business that lacks a large marketing budget and/or expertise	Information has been collected for other purposes and so may be difficult to analyse, may lack relevance or may not be factually correct, e.g. Wikipedia   It can be expensive to purchase market-specific secondary data from specialist companies, e.g. MINTEL reports   Information may be out-of-date, especially in dynamic markets